Changes to privacy laws will impact digital marketing forever

All businesses rely on data to drive business decisions, attract customers and out-shout the competition however with changes to how data is collected, shared and sold, businesses need to consider how much of their marketing is reliant on third party data and how to pivot as maintaining privacy across the web takes centre stage across digital ecosystem.

2020 was a pivotal year for businesses with both disruption and innovation flamed by COVID-19. While world news has been dominated by the pandemic, a series of announcements by major players in the digital marketing world has slipped below most of our radars. However these announcements are going to impact SMEs significantly. My prediction for 2021 is that changes to privacy laws will impact digital marketing forever and businesses need to adapt or get left behind. First party data will gain relevance as third party data becomes restricted.

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Third party data from cookies and pixels is on the way out.

Have you ever searched for something specific like a pink cat onesie on Google Chrome then get bombarded with ads seemingly everywhere from brands selling pink cat onesies?

Or maybe you lingered on an ad for fitness supplements on Facebook and now it’s all you see on your feed?

Advertising is driven by cookies, which are tiny snippets of data that get added to your web browser when you visit a certain website or use a search engine. store data about you and your online behaviour. This data is then sold to advertisers who then ensure you see ads from a website you just visited or a product you seemed interested in.

Since cookies are restricted to your web browser, if you are concerned about privacy you can simply switch it off (by using an incognito window), clear cookies or use a browser that blocks cookies (like Safari or Firefox)

Pixels are however a different story altogether. Tracking pixels are code snippets added to a website in order to gather information from visitors. The key difference to cookies is that tracking pixels can follow users across devices and cannot be cleared or deleted. The data from pixels is then used for targeted advertising.

If you have set up Google and Facebook ads for your business, then you have installed pixels to track visitor behaviour and conversions on your website. What you are essentially doing is passing on the data collected from YOUR website to Google and Facebook who then charge YOU a fee to target YOUR visitors on their platforms. They get to keep the data, resell it and they get to charge you for it!

Third-party data providers are enhancing privacy

Digital marketing is the art of making your business heard in this crowded online ecosystem through various channels such as social media, advertising, emails, etc. If you have a business then no doubt you use digital marketing to attract and retain customers. Digital marketing relies heavily on third party data and recent announcements from the major market players means that protecting the privacy of visitors to your website could restrict how effectively you can target advertising. Here is a timeline of changes

May 2020: Apple announces that third party cookies are blocked by default in the Safari browser
Jan 2020: Google announces a plan to phase out support for third-party cookies in Chrome within 2 years
Jan 2020: Under the California Consumer Privacy Act (CCPA), California residents have the right to opt out of having their data sold to third parties, the right to request disclosure of data already collected, and the right to request deletion of data collected
September 2019: Firefox blocks third party cookies
May 2018: General Data Protection Regulation (GDPR): Organisations in the European Union have to ensure that personal data is gathered legally and under strict conditions. Those who collect and manage it are obliged to protect it from misuse and exploitation, as well as to respect the rights of data owners or face penalties for not doing so.

What about Facebook?

In March 2019 Facebook announced that it was making it easier for uses to manage their privacy including viewing what data apps and websites send to Facebook about you. While Facebook is making privacy simpler ON the app they will not be changing how they track you off the app, i.e. Facebook pixel tracking is here to stay

This means that Facebook will continue to remain a valuable marketing tool for businesses but it is also losing relevance over concerns about privacy and emergence of other social media platforms like Tik Tok. Consider this chart which shows that Facebook’s dominance is declining (https://gs.statcounter.com/social-media-stats#monthly-201701-202001)

Increased privacy regulations = more expensive advertising

Honestly, it is difficult to predict exactly what the future landscape will look like for digital marketing. What is certain is that as more people become more aware and concerned about privacy, less data will be available for advertising and targeting.

This could drive up the cost and drive down the efficiency while reducing the pool of potential customers you can reach

SMEs should have robust first party data strategies

SMEs should make 2021 the year of data. Take a long hard look at how your business collects and uses data, how much of this data do you own and how much do you have to pay third party providers to use? Data is the foundation block on which successful businesses are built, an average SME business collects hundreds of thousands of data points every year, yet most businesses do not have a strategy around data collection and usage.

Think about it this way, as Facebook loses popularity and Google turns off cookies, how will you find and engage with potential customers if you do not collect and control your own data?

This post was written by Megna Murali, founder of Arche Analytics.